PETER MANDELSON is to make a shock return to the Government in Gordon Brown's Cabinet reshuffle, it was reported today.

Mr Mandelson, who is Britain's European Commissioner, has twice resigned as a Cabinet minister under a cloud. He's back - for the third time PETER MANDELSON'S return to the Government cements his status as the ultimate "comeback kid" of British politics.

Mr Mandelson made history when he became the first Secretary of State to resign twice - first from the Department of Trade and Industry and later from the Northern Ireland Office.

Many in Westminster were surprised at his return to the Cabinet following his first resignation, and thought there would be no way back to frontline politics after he was forced to quit a second time.

But he switched to Brussels where his role as Trade Commissioner has kept him in the headlines - with some very public spats with French President Nicolas Sarkozy.

His return will spark fury among some Labour MPs, who accuse him of dragging the party away from its socialist roots.

It will also amaze some that he is returning to an administration led by Gordon Brown, with whom he notoriously fell out because he backed Tony Blair for the leadership after the death of John Smith.

His return, if confirmed, would also mark the end of a feud with Mr Brown dating back more than a decade, when Mr Mandelson supported Tony Blair to become Labour leader following the death of John Smith.

Mr Mandelson's spokesman in Brussels refused to comment on reports.

It was not immediately clear what ministerial post Mr Mandelson had been offered by Mr Brown.

Having given up his parliamentary seat in 2004 to take up the post of Trade Commissioner, he would have to be given a peerage and a seat in the Lords if he returns to government.

His appointment would be seen as a major olive branch to Blairites in the Government still smarting after Mr Brown's perceived put-down of their favourite - Foreign Secretary David Miliband - as a "novice".

The move could also pave the way for Chief Whip Geoff Hoon to leave the Government and replace Mr Mandelson in Brussels.

The disclosure suggests Mr Brown's reshuffle will be more widespread than had been originally anticipated, although senior figures like Mr Miliband and Chancellor Alistair Darling are expected to retain their jobs.

It was reported Mr Mandelson will replace Business Secretary John Hutton, who will then take over from Des Browne at Defence.

Mr Brown also has to find a replacement for Ruth Kelly, who is standing down as Transport Secretary to spend more time with her young family.

Outside the Cabinet, Trade Minister Lord Jones of Birmingham is also leaving the Government to return to the private sector.

Rather than a move to Europe, it was reported Mr Hoon will take over Ms Kelly's job as Transport Secretary.

In an interview earlier this week, Mr Mandelson publicly voiced support for Mr Brown, while urging him not to abandon the New Labour "project".

"I do not think that changing the face at the top is the panacea some imagine," he said.

"But the whole of the leadership must remain true to the values and principles that have delivered us success in the past 10 years."

Derek Draper, a former adviser to Mr Mandelson who has recently returned to work for the Labour Party, said: "I think Peter will prove to be a formidable secretary of state.

"He will be a really brilliant contributor to the strategy of the Government and the presentation of the Government and people will look at Peter and think you know what, we misjudge Peter Mandelson sometimes'.

"His strengths and his good side will come through now.

"As someone who knows him and has had my issues with him, I think he deserves this and he will prove to people why he deserves that place at the top table of British politics."